OPEC Plus “Cuts” Deal to Boost Supply

OPEC Plus “Cuts” Deal to Boost Supply

OPEC and its “plus” allies have reached another covid-induced agreement, but this time it will not be more production cuts. For the second time since the covid pandemic began, the OPEC plus members will be reversing the reductions and beginning to increase production. The increases are scheduled over time, will begin in August 2021, and the agreement bounds the countries together through 2022.

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Sky High Crude Eyes $100/BBL Amid Inventory Draws and Decreased Exploration

Unless you have been living under a rock, it is no secret crude oil has been on a tumultuous ride. Crude has long been a commodity that follows up and down trends on traditional cycles. The seven-year boom followed by a year of bust broke cycle in 2015 and saw the oil and gas sector consumed with historic lows, layoffs, and bankruptcies. Oil struggled to regain its dominance at $100+/bbl and E&P Operators scrambled to be leaner and more efficient as $40 seemed to be the new $100.

 

 

Fast forward to 2019/2020 when oil finally seemed to find a balance. Exploration began to increase, and we saw some promise in drilling rig numbers. COVID-19 ravaged the world oil demand and we saw crude trade negative. COVID-19 kept a death grip on crude for the better part of a year, but 2021 is lining up to be a HUGE year for Crude. The roller coaster ride for crude leading up to 2021 has culminated into ripe conditions for an oil boom!

 

The API reported a crude draw of 8.537 million barrels far exceeding the 3 million barrel expected draw. While gasoline and diesel added inventories, the EIA reported less production. In the face of refined product inventory increases, prices held and, in some cases, climbed as the supply/demand curve signaled a stronger demand and tightening supply. Crude was trading at 32-month high of near $75 a barrel.[1]

Crude has averaged $65/bbl in April, $68/bbl in May, and is holding above $70/bbl for June. Experts predict that crude will easily surge above $100/bbl and gas prices are likely to follow suit and increase as well. As supply continues to tighten and demand increases oil will continue to climb. The International Energy Agency began Friday urging OPEC to ramp up production while the Saudi Prince urged investors to back oil and gas exploration.[2] Energy investors have been scared off and have shied away from backing E&P operators. The uncertainty leading up to June 2021 has led to less investing for exploration and drastically cut drilling budgets. Mergers and Acquisitions have pushed out many small operators and the larger operators are sticking to smaller and more lean operational footprints that focus more on efficiency and per foot costs.[3]

 

The new super cycle of $100+/bbl crude is expected to come quicker than anticipated but also may last less than 18 months. Many factors could derail oil futures. New Covid strains that lead to lockdowns are a major concern. Government regulation and emissions standards are also sizeable threats. Despite the oil rally and a looming price explosion, many supers are still being ultra conservative in the Oil and Gas play.[4] Navigating through the ever-changing crude and refined products market is less than ideal so talk to a Guttman sales representative today to secure your success for 2021 and into the future.

[1] https://oilprice.com/Energy/Crude-Oil/Oil-Jumps-On-Significant-Crude-Draw.html

[2] https://www.foxbusiness.com/energy/oil-prices-hit-100-barrel-crisis-looming-energy

[3] https://www.worldoil.com/news/2021/6/16/saudis-warn-an-oil-price-surge-could-follow-reduced-global-crude-exploration

[4] https://www.rigzone.com/news/conditions_ripe_for_oil_price_boom-15-jun-2021-165690-article/

It’s a Bird! It’s a Plane! It’s…Recycling Plastics for Jet Fuel!?

While overseas travel continues to be impeded by COVID-19 fears and travel concerns/regulations, domestic airway travel is seeing it’s largest surge since the depths of the pandemic. Travel enthusiasts are taking to the sky after more than a year of lockdowns and airliner travel is now only 30% lower than the same time in 2019. The third quarter numbers are projected to reach 1.47 million barrels per day which is 50% higher than expectations and an inviting indication for refiners who have struggled with tough margins during the pandemic.[1] So, with jet fuel demand increasing and expected to surge this summer how does this all relate to recycled plastics, of all things? Read More

Riding the Wave of the Clean Energy Surge

Climate change is not only a hot topic in the U.S., but also a growing concern of major corporations all over the world. Many large corporations are beginning to sink massive amounts of capital into programs and companies to eliminate fossil fuels and ride a wave of clean energy and renewables into the future. Even the largest natural gas producing company in the U.S., EQT, has bought into the clean energy philosophy. Other corporate giants such as Amazon, GE, NextEra, Uber, IBM and lastly, to no surprise, the government.

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March Madness 2021 Boom or Bust for Crude

Crude has been the underdog since Covid-19 broke onto the scene in early March of 2020. We have seen historic contango, negative trading, inventories at the verge of 100% capacity. However, we have also seen refineries curtailing production and shutting down, crude breaking technical level after level, OPEC + committing to decreased outputs, a Texas winter weather creating supply concerns, and a slow steady recovery of crude as inventories are drawn down and production resumes. Crude has built a full head of steam and looks to be an unstoppable force and a surefire pick to rise to glory yet again for 2021. March Madness is known for its volatile emotional up and downs and surprise sleeper teams with unimaginable upsets. Will 2021 and a third European lockdown amid vaccine safety concerns be the sleeper to upset the rise of Crude?!

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2021 Oil Rally; Biden confirmed as the 46th POTUS

We are a mere 7 days into a new year, and have already seen the first oil rally in the markets. Many factors have played a role in the first rally of the new year. Oil has been tumultuous over the last 11 months but has seen some stability and positivity since Biden’s election win in November. Biden was confirmed by the senate to be the 46th President of the United States of America and he will have a democratic controlled House and Senate to put his plans into action.

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The Scammers Who Stole Christmas

Although Black Friday and Cyber Monday are behind us, most Americans still have a large portion of their holiday shopping to complete. In a year of turmoil and pandemic scammers have gotten very sly in their manipulative ways to steal gifts, money, and personal identity, especially in the new digital world we live in where online shopping for the holidays is expected to increase by 30%. Emails, text messages, and now curbside pickup are all ways to be scammed out of your holiday goods.[1]

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Shot Heard Round the World…Vaccine Update

News of the Pfizer vaccine is spreading like wildfire around the world today. Covid-19 has killed more than 1.2 million people the world over. Today, Pfizer announced a vaccine that has a 90% effective rate with no serious safety concerns. If these numbers are to hold true, Pfizer’s new vaccine would hold up to the childhood disease vaccines like measles. Additionally, Pfizer says it expects to have 15 to 20 million vaccines ready in the US by year’s end provided the FDA issue emergency authorization later this month. They also predict to have over 100 million doses ready worldwide.[1]

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Slim in…for good?

Oil and gas explorations remain sluggish and failing to rebound as expected. At $40+ a barrel and positive market indicator would historically promote conditions for the industry to recover, however there has been no indication of a recovery to speak of. The new normal seems to be a slim, budget conscious, and efficient industry soup to nuts.

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